Caught Short?

If any of Wall Street's 1,200-odd market advisers had urged their clients five months ago to "buy Kaiser-Frazer stock and double your money," he would have been hooted at. On the New York Curb Exchange, where the stock steadily dropped from its $20.25 offering price to a low of 5 last May, it was considered shrewd to be "short" on Kaiser-Frazer, i.e., to bet it would go lower.

But last week, anybody who had bought K-F stock at its May low, and kept it, had more than doubled his money; the stock had climbed steadily to the year's high of 11 3/4. The reason: since July, Henry Kaiser, Joseph Frazer and associates, while publishing no figures, had quietly spread the word that K-F was making money hand over fist. Their unofficial story: during the first five months of 1947, the company lost $1.4 million (on top of 1946's loss of $19.3 million), but in June, the company got in the black.

By last month, according to the dope, it had earned $6.3 million profit, and expected to earn another $12 million in the last quarter. Furthermore, because of the 1946 losses, up to $19.3 million of this profit would be tax-exempt under the carry-forward provision.

There was no way of checking this; K-F had put out no statement since its 1946 accounting and, despite the fast runup, speculators still eyed K-F stock warily. The short interest at week's end amounted to 20,000 shares, one of the largest on the Curb.

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